Coinbase is dialing back on its aggressive hiring plans – a change that comes as the embattled crypto trading platform contends with a steep downturn in the market and a sharp plunge in the price of bitcoin.
Coinbase COO Emilie Choi disclosed the hiring slowdown in a message to staffers – revealing the firm would tighten its belt despite initially planning “to triple the size of the company” in 2022.
“Given current market conditions, we feel it’s prudent to slow hiring and reassess our headcount needs against our highest-priority business goals,” Choi said in a memo published on Coinbase’s website on Tuesday.
“Headcount growth is a key input to our financial model, and this is an important action to ensure we manage our business to the scenarios we planned for,” Choi added.
When reached for further comment, a Coinbase representative noted the company expanded its headcount by nearly 1,200 employees in the first quarter and has “no intention of slowing our pace of product development or our relentless customer focus.”
Coinbase has no current plans to conduct layoffs, the representative added.
“No layoffs are being discussed right now. We’re simply focusing our hiring efforts on roles that will have the most impact on our business priorities,” the representative said.
Coinbase shares are down more than 70% so far this year, plunging from highs achieved during the COVID-19 pandemic as stimulus checks helped to juice investment in cryptocurrencies and high-growth tech stocks. Investors have dumped riskier assets in recent months as fears mount that the Federal Reserve’s plan to fight inflation will trigger a recession.
The market downturn also has impacted leading cryptocurrencies such as bitcoin and sparked fears that a crypto bubble has burst. The price of bitcoin is hovering below $30,000, down from a peak of $69,000 last November – with the latest slump driven by the collapse of the Terra stablecoin.
But Choi downplayed concerns about Coinbase’s financial health in the companywide message, noting the company has a “solid balance sheet” and has bounced back from market downturns in the past.
“Big picture: We know this is a confusing time and that market downturns can feel scary. But as we said at last week’s Town Hall, we plan for all market scenarios, and now we are starting to put some of those plans into practice,” Choi said.
Coinbase’s stock sank last week after the company admitted the crypto holdings of its customers could be at risk if it goes bankrupt. The market reaction was so severe that CEO Brian Armstrong posted a series of tweets in which he addressed the situation and said the company was at “no risk of bankruptcy.”
Coinbase also posted weak first-quarter results earlier this month, including a loss of $430 million during the period and a decline in trading volume on its platform.
Currently, Coinbase has more than 4,900 employees, according to its website.